It stands for exhaust gas recirculation & is a vacuum operated valve which operates at lighter throttle openings & lets some of the exhaust gases mix with the inlet airflow. The main reason this is done is to reduce the nitrogen oxides etc which are formed during higher temperature/leaner mixture combustion. Unfortunately mixing old stale exhaust fumes with fresh air before putting it into the engine does nothing to help performance, economy or efficiency so many on here myself included have fitted an egr bypass in place of the valve to prevent this from happening. The only downside is that exhaust temperatures can become a little hotter which on some cheaper brands of car e.g. Renault can be a problem for the turbo chargers but on the Td4s BMW engine this is not an issue. This does not affect the emmission readings for the MOT as they only measure for carbon particulates, indeed these should be improved now that fresh air only is being put through the engine.